Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Fact Checking]

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BTW., it's interesting how the mainstream media insists on "unit sales", instead of reporting what matters: revenue from car sales.

Sales of 10 units of 2018 Ferrari 488 GTB's should count more than 20 units of sales of the 2018 Ford Focus, right?

 

[Fact Checking]

That one will be nasty surprise for the shorts team. They try to put under the rug the Energy business and pretend it won't grow much, even though Elon and the team indicated it will grow faster than the auto business.

The Tesla shortz team doesn't do 'long term': about a quarter of them bled out after Q3'18 ER, their short term goals (ha!) are to survive the Q4'18 and Q1'19 ERs and somehow exit their positions.

Once those delusions are shattered there will be a much diminished shortz team, with a jumbled mess of even more discredited arguments. The few survivors will IMO seek easier targets than Tesla. Shorting-motivated FUD will drop significantly.

 

[MXWing]

BTW., it's interesting how the mainstream media insists on "unit sales", instead of reporting what matters: revenue from car sales.

Sales of 10 units of 2018 Ferrari 488 GTB's should count more than 20 units of sales of the 2018 Ford Focus, right?

Depends on agenda of who is counting.

First year production of Taycan sold out (20,000? LOL) is about the best headline you can get when you have no chance of a headline like "Taycan reservations top Model 3 reservations" (not happening).

Spinning Alpha is rife of these examples.

 

[Thekiwi]

Surprised this hasn’t been posted yet:

 

[KarenRei]

From Kelvin Yang (@KelvinYang7) on Twitter

GF3 has Chinese gov max support: 1200KVA grid connection took only 37 days vs 80 days average.

I won’t bother linking to Vincent tweets because Elon himself RTs Vincent

Wait, the grid connection is already done? Man, I wasn't expecting that.

Can't wait until the concrete starts getting poured. The spy shots out of the place are going to be a constant stream of minor good news. Seeing a bunch of muddy flattened fields surrounded by a fence is one thing, but watching concrete and steel rise up is another, from a psychological point of view.

 

[shlokavica22]

The Tesla shortz team doesn't do 'long term': about a quarter of them bled out after Q3'18 ER, their short term goals (ha!) are to survive the Q4'18 and Q1'19 ERs and somehow exit their positions.

Once those delusions are shattered there will be a much diminished shortz team, with a jumbled mess of even more discredited arguments. The few survivors will IMO seek easier targets than Tesla. Shorting-motivated FUD will drop significantly.

True that. However it will open a new "front" for them. Counting Model 3 at the gates is much easier than tracking the Energy business. It will bring even more uncertainty for them. In fact- it's also harder for us to track.

 

[shlokavica22]

Can't wait until the concrete starts getting poured. The spy shots out of the place are going to be a constant stream of minor good news out of the place. Seeing a bunch of muddy flattened fields surrounded by a fence is one thing, but watching concrete and steel rise up is another, from a psychological point of view.

It will be a mental torture for the other team.

 

[Fact Checking]

Wait, the grid connection is already done? Man, I wasn't expecting that.

Can't wait until the concrete starts getting poured. The spy shots out of the place are going to be a constant stream of good news. Seeing a bunch of muddy flattened fields surrounded by a fence is one thing, but watching concrete and steel rise up is another, from a psychological point of view.

They were already pouring concrete to prepare for the groundbreaking event:

 

[W84M3]

The only thing holding back the GF3 pumping out Model 3's will be qualified workers.

Construction of the factory, equipment & logistics are non-issues because a) China b) Grohmann will switch over from GF2 equipment to GF3 equipment.

 

[Fact Checking]

Construction of the factory, equipment & logistics are non-issues because a) China b) Grohmann will switch over from GF2 equipment to GF3 equipment.

It takes quite some time to install a battery production factory, with lots of specialized machinery that has long lead times.

Likewise a full car factory takes time as well: stamps, molding machines, paint shops, lines with hundreds of robots - Grohmann programs/automates them but doesn't make the robots AFAIK. All of that takes time.

So I'd expect battery packs to come from the U.S. initially - maybe even full body-in-white chassis with final assembly in the Shanghai Gigafactory.

Even that partial level of assembly would allow Tesla to avoid the 25% import tariff and shorten the logistics chains though - and every incremental step of bringing more and more GF3 equipment online would improve the economics of it.

 

[KarenRei]

Yep. I expect production to start with CKD, with the hardware fully or nearly fully import (except for components currently made in China). Followed by increasing Chinese sourcing of simple parts and a transition from CKD to BIW when local paint is ready. Local body, stamping, plastics, motor, and battery pack production will take much longer. I'd expect cell production to be last, if done at all on-site.

I think far too many people have looked at GF3 as "all or nothing" - e.g. it's either a completely finished, independent, fully operational factory, or it's just a cost-sink doing nothing. They're going to be working on GF3 for years, but it's not going to take years for it to start being useful.

 

[AlexS]

When was this video made by Antipodes Partners shorting Tesla? Anyone seen it before?

edit: I am just wondering how the heck can Australian guys short Tesla when they have seen what powerpacks did in their country

 

[Matias]

I had to google ckd

Knock-down kit - Wikipedia

 

[Fact Checking]

Yep. I expect production to start with CKD, with the hardware fully or nearly fully import (except for components currently made in China). Followed by increasing Chinese sourcing of simple parts and a transition from CKD to BIW when local paint is ready. Local body, stamping, plastics, motor, and battery pack production will take much longer. I'd expect cell production to be last, if done at all on-site.

BTW., the reason I guess they'll start with BIW this year and not a CKD (which is a painted body-in-white):

• There's the curious case of Tesla having planned a paint shop expansion for Fremont and contracted it two years ago, but not executed it yet. Maybe the new paint booths will be installed in Shanghai?
• Painting in China allows customized Model 3's from the very beginning, in the color the customer prefers. This removes 30-40 days of shipping delay.
• Fremont paint shop is a major bottleneck: painting in China frees up that paint shop capacity for NA and EU production.

So I think paint shop might be amongst the first things built in China, in addition to a moulding shop and a general assembly line.

(An open question is corrosion protection: can a BIW be shipped over the ocean with no treatment whatsoever?)

Stamps and chassis assembly would be next, battery and power train production last.

 

[shlokavica22]

When was this video made by Antipodes Partners shorting Tesla? Anyone seen it before?

I just did. Waste of time, to put it bluntly.
To answer your other question- it was done probably at the beginning of 2018. There was a slide showing 2017 data and TSLA related numbers didn't have Model 3 share in them.

They are long Hyundai, so there is that.

 

[Fact Checking]

When was this video made by Antipodes Partners shorting Tesla? Anyone seen it before?

In the video they are blatantly lying or misleading about several things:

• FAIL #1: they add hybrid ICE vehicles (a dead-end technology) to make Tesla's market share appear small...
• FAIL #2: they compare income P/E ratio to ICE OEMs, ignoring cash flow and margins.
• FAIL #3: they pretend Tesla needs capital markets for growth, ignoring the Shanghai Gigafactory that is financed through local loans and ignoring the 6-8 billion dollars cash flow Tesla can make in 2019 for growth capex.
• FAIL #4: their slide says $60b valuation, which is $350 share price. Video is dated yesterday, $318 share price.
• FAIL #5: they claim all the batteries and the IP is owned by Panasonic - while in reality the IP is shared and Panasonic's output is exclusive to Tesla: Panasonic is not allowed to make 2170 cells for other carmakers at Tesla's Gigafactory.

So it's dishonest or misinformed arguments throughout, we heard them all before - nothing new in there. I watched the video so you guys don't have to.

My guess: their short position must be in trouble if they are publishing their thesis - they want more shorts to jump on board and help them drive down the $TSLA price.

 

[bhtooefr]

(An open question is corrosion protection: can a BIW be shipped over the ocean with no treatment whatsoever?)

Could always treat it with a rust inhibitor, or even prime it but not paint it (so it only goes through part of the paint shop).

 

[Yamantasdivar]

When was this video made by Antipodes Partners shorting Tesla? Anyone seen it before?

edit: I am just wondering how the heck can Australian guys short Tesla when they have seen what powerpacks did in their country

“$US60bn valuation - priced for world domination” fell off my chair

 

[Fact Checking]

I just did. Waste of time, to put it bluntly.
To answer your other question- it was done probably at the beginning of 2018. There was a slide showing 2017 data and TSLA related numbers didn't have Model 3 share in them.

Not sure about the early 2018 time frame: he was talking about fewer shorts giving opportunity to new shorts. 25% of shorts closing their positions is a late 2018 development.

My guess is that the presentation is late 2018 - but some of the data is outdated: either their short position is really old (and now in trouble), or they are trying to mislead via old data: it's hard to base a TSLA short thesis on Q3'18 financial metrics.

 

[RationalOptimist]

Surprised this hasn’t been posted yet:

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One thing smart about announcing this: it avoids the risk of current Chinese demand for high perf model 3s falling off a cliff. There's no reason to wait.